Inecalcitol shows promise in adult leukaemias
Hybrigenics (PARIS:ALHYG) is making significant progress in developing inecalcitol, which could reinvigorate the partnership search for ongoing studies in oncology. Promising Phase II data in chronic lymphocytic leukaemia (CLL), designated as an orphan drug in the EU and US, and the addition of two new indications, chronic myeloid leukaemia (CML) and acute myeloid leukaemia (AML), increase the commercial potential of the vitamin D analogue. We have increased our valuation from €65m to €91m.
Inecalcitol – potentially a versatile oncology therapy
Results from Phase II trials of inecalcitol in CLL suggest that it has therapeutic potential. Final Phase II data were consistent with earlier findings; inecalcitol halted disease progression in 52% or in 11 out of 21 patients treated for at least five months; one saw a 90% decrease in symptoms after 10 months of treatment. Two new Phase II studies of inecalcitol, in CML and in AML, are due to start in H214 and H115 respectively, after preclinical studies suggested anti-proliferative and potentially synergistic effects with existing therapies in these indications.
Services subsidiary diversifies and expands
Services turnover grew 18% to €3.9 in FY13 from €3.3m; we forecast that FY14 revenue will increase 30% to €5.1m. The growth strategy is taking shape – Hybrigenics has bolstered its position in protein services and diversified into genomics. It is now well-positioned to offer its broader range of services to additional markets, leveraging growth through its newly established development and marketing hub in the US.
Funding in place for Phase II trials in AML and CML
We forecast that Hybrigenics is funded into early 2017. The gross cash position at the end of December 2013 stood at €2.4m; subsequently it drew down €1.1m on the Yorkville equity line and raised a total of €6.1m through a private placement and capital raise. The proceeds will fund forthcoming Phase II leukaemia trials.
Valuation: DCF valuation of €91m
We value Hybrigenics at €91m on a risk-adjusted DCF basis (€3.5 per share), vs €65m previously. The increase is due principally to the addition of two further indications for inecalcitol, with funding in place for Phase II studies. There is scope for the valuation to rise to €117m if inecalcitol moves into Phase III studies for CLL. The services division is valued at €10m or 2x FY14e revenue.
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